Public Sector Pension Investment Board (“PSP”) was a Canadian corporation that invested the pension assets of various Canadian public employees. Between 2012 and 2013, PSP invested with investment advisor Saba Capital Management, L.P. (“Saba”). At some point, PSP experienced losses and exercised its redemption right—that’s when an investor can require a company to repurchase shares under specified terms. Saba calculated the redemption price. PSP contested the value of certain bonds. Saba then used a different pricing method to mark the bonds up to higher prices, even though, according to PSP, nothing had changed in the markets since PSP’s redemption so as to justify an adjustment. PSP sued for breach of contract and fiduciary duty, claiming that Saba breached the investment contract’s requirement to adequately determine the redemption price. PSP also claimed that Saba’s managing member Boaz Weinstein caused the fund to breach its contract to further his personal interests.
The court dismissed the claim against Weinstein, noting that a corporate officer acting in good faith is not liable for the acts of the corporation, unless the officer’s actions constituted independent wrongful acts. To hold Weinstein personally liable, the court said, PSP had to show that the officer either acted beyond the scope of his or her employment or was motivated by his or her personal gain– essentially acting for his own personal interests rather than for the corporate interests. Here, the court found that any personal benefit allegedly received by Weinstein as a non-redeeming shareholder in the fund was also bestowed upon the corporation and all other non-redeeming shareholders, which was not sufficient to show that Weinstein acted for his own personal interests. The court emphasized that, from a policy perspective, corporate officers and directors should not be disincentivized from furthering the interest of their corporation when they might receive a benefit as well.
So can corporate officers be held personally liable for their corporation’s misdeeds? Well, it depends.
This post was part of a two-part series on the liability of corporate officers under New York law. You can find the other post by searching our blogs at www.mcbrideattorneys.com. If you have any questions about the content of this blog or other business law issues not discussed here, please contact us.
This posting is intended to be a planning tool to familiarize readers with some of the high-level issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.
Steps have been taken to verify the contents of this article prior to publication. However, readers should not, and may not, rely on this article. Please consult with counsel to verify all contents and do not rely solely on this article in planning your legal transactions.
 See generally Pub. Sector Pension Inv. Bd. v. Saba Capital Mgmt., L.P., 2016 N.Y. Slip Op. 30215(U) (N.Y. Sup. Ct. Feb. 8, 2016). Unless otherwise noted, all references to the case are to this citation.